Domestic medical tourism. The big new thing?

Thanks to yesterday’s Wall Street Journal (Traveling for Care — In the US) the concept of domestic medical tourism has been bouncing around the media. (If you’re not a WSJ subscriber you can read the story here.)

In a new twist on medical tourism, U.S. employers are encouraging workers to travel domestically for medical care…

In January, U.S. supermarket chain Hannaford Bros Co. began offering employees the option of getting hip and knee replacements at a hospital in Singapore. A hip replacement costs about $43,000 in the U.S. compared with $9,000 in Singapore, according to data from Planet Hospital, a medical tourism company.

“After the announcement, I got calls from several [U.S.] hospitals offering to match Singapore on pricing,” says Peter Hayes, Hannaford’s director of associate health and wellness.

The article also describes Healthplace America and its CEO, Ken Erickson, who are targeting US employers who want to access anetwork of lower cost US health care facilities.

Not to toot my own horn too much, but I was a year ahead of the WSJ in spotting this trend. Last September Ken Erickson was running Global Choice Healthcare, (which changed its name to Healthplace America this year) and he was just starting to shift his focus from an international to a domestic network. You can read or listen to my interview with him at MedTripInfo.

Also about a year ago, my white paper (Medical Tourism — Implications for participants in the US health care system) predicted that medical tourism would lead employers and health plans to drive better deals from US providers, and not just on price:

[I]t may be possible to use the expansion of overseas networks to spur improvements closer to home. One possibility is to use overseas providers as a way to increase the flow of outcomes information… This could be a good way to get local providers to increase transparency and to improve their performance as they compete to demonstrate preeminence. And payers shouldn’t rule out the possibility of using comparisons with overseas pricing to help hold the line on local reimbursement rates.

There’s no way everyone is going to go overseas for care, nor should they. But once overseas hospitals pose a credible threat to their US counterparts, it will spur improvements in pricing and service that will benefit everyone who pays for health care.

September 11, 2008

4 thoughts on “Domestic medical tourism. The big new thing?”

  1. The US counterparts will adapt by lowering prices, but how much will they be able to compete with lower prices elsewhere? e.g. many go to India for spinal fusion costing of $5,500 as against $62,000 in the US!

    And what about the poor and the uninsured? They probably will still endure hardships.

  2. David:

    Good catch on this piece!

    This internal medical tourism dynamic is the front end of a profound event that can and, IMO, will have a domino effect, by redirecting sourcing and encouraging greater pricing elasticity than hospitals and/or integrated delivery systems have traditionally extended.

    A very clever move, and market sensitive phenomenon that could quickly develop some traction on the buy/sell side of certain bundled health care services.

    Thanks for the post.

  3. Fred, You’re right, US costs won’t reach Indian levels, but they don’t have to for the impact to be felt. As an illustration, if US hospitals reduce prices by 10 or 20 or 30 percent –which is feasible– all US patients will benefit. But the hospitals will only do it if they’re worried about patients going overseas for care. The fact that the option exists is enough.

    Poor patients can get charity care or Medicaid. The real challenge is for uninsured middle class people with assets. They may very well decide to go abroad instead of cashing out their retirement money.

    David

  4. Hi David,

    They was an article which i came across recently which spoke about Singapore Takes Medical Tourism Overseas. That is really interesting isn’t it.It makes things easier for people who stay abroad and to those who seek affordable medical treatment options.

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